As SoftBank, the Japan based Internet and telecom giant, was busy locking its funding deals with taxi aggregator Ola and e-commerce giant Snapdeal last month, it apparently also gave them an offer of buying out the share of their angels and early venture capital investors. And, if some sources are to be believed, most of them bluntly denied the offer.
It must have been a really difficult decision on the part of the investors but most of them at this point of time have returns of hundred times their investment on paper and they see this value growing further.
"I haven't sold any shares so far. If someone is offering a valuation which I expect the company to reach in the next two years, then I can think about it," said Anupam Mittal, founder, People Group in a statement to the Economic Times. People Group is one of the early investors of Ola. He further added, “Investments like Ola come once in a lifetime”.
Early capital investors holding on to their winners in the risk capital business has now become like a norm. According to data available from VCCEdge, a financial research platform, since the year 2011 the Indian ecommerce and online business has had over 694 investments totaling about $5.56 billion. But during the same period of time, there have only been 45 exits worth $295 million.
Ola, the taxi aggregator, is a four year old startup whose valuation has increased by more than 10 times in the past one year. The company was valued at $180 million in July this year when Steadview Capital, a Hong Kong based hedge fund, led a funding round. The latest investment from SoftBank has skyrocketed the company’s valuation to a whopping $650 million. These figures clearly explain why the early investors are holding on to their bets in these companies. Ola’s early backers include Snapdeal co-founders Rohit Bansal, Kunal Bahl, Rehan Yar Khan and Powai Lake Ventures.
On the other hand, the early venture capital investors in the ecommerce giant Snapdeal are sitting on at least 8-10 times the capital invested. The latest funding round valued Snapdeal at $2 billion and its investors believe that the company has a potential of reaching $5-10 billion in the near future.
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